To arrive at an "affordable" home price, we followed the guidelines of
most lenders. We've allowed a total debt-to-income ratio of no more than 36%.
And we have assumed a housing payment-to-income ratio of 28% for our
conservative estimate, and 33% for the aggressive one. Before buying, however,
you should also factor in other savings needs, including retirement and college.

KNOWING EXACTLY when is the perfect time to refinace would require a bit
of psychic ability on your part. That's why many experts say if you find a good
deal that saves you a significant amount of money, it's probably not worth
trying to beat it by predicting mortgage-rate moves.

So what rate would you need before refinancing makes sense? That's what this
worksheet is designed to tell you. One thing to keep in mind, though: The
interest rate isn't the only thing to consider when shopping for a new loan.
Refinancing, after all, isn't free. There are the bank fees, the bills for a new
appraisal and inspection, your lawyer's fee — you name it. This worksheet will
help you figure out how much you'll save on your monthly payments with a lower
rate and how long it will take, given those savings, to repay the cost of
getting a new loan.

YOU'VE GOT SOME EXTRA CASH? Should you invest it or use it to pay down
your mortgage? Look at it this way: When you prepay part of your mortgage, you
end up paying less in interest. But in the bargain, you also lose part of your
mortgage-interest tax break. Your true savings, then, can be expressed as the
difference between your mortgage interest rate and the rate at which you take
your deduction (a function of your total marginal tax rate). If that net
percentage figure is less than the amount you could make investing the cash,
you're better off investing it.

WHICH TYPE OF LOAN
is best? That depends several factors: how long you
plan to stay in your home, your interest-rate outlook, your budget, and your
tolerance for risk.

Adjustable-rate mortgages are initially cheaper than fixed-rate loans. And
they can be a good deal if you know you're going to stay in your home for a
relatively short period of time. But you run the very real risk that interest
rates could rise sharply and drive up your monthly payments. Fixed-loans, on the
other hand, cost more but offer no surprises. And for many, that comfort is
worth the added price.

To figure out which is best, you've got to consider both your best and your
worst-case scenarios. Our worksheet can help. Just fill in your numbers and then
use the graph and "compare" feature to evaluate your fixed and adjustable
options based on the total amount of interest paid as well as the amounts of
your first and last payments.

WHEN IT COMES to mortgage points, it pays to keep score. Be warned, though: It can get tricky. The term points has multiple meanings in the mortgage world.

Mortgage points can refer to loan origination fees (fees charged by the underwriter) or discount points (also known as loan discounts). The worksheet below focuses on discount points, which represent 1% of the total loan amount. By paying a discount point, you can lower your interest rate. Consider it prepaid interest.

Mortgage (and other
loan) qualification is increasingly being done by means of "credit scoring."
This is a mathematical analysis which considers many different aspects of your
credit history -- late payments, delinquencies, tax liens, etc -- and expresses
it as a single number, or "grade."

This JavaScript
calculator will "score" your credit using the number of late payments you have
on various credit accounts. This isn't a true "credit score," but will give you
a pretty good idea of how you'd fare. Please note that different lenders
may count late payments older than 12 months against you; ours doesn't. And
different lenders may assign you a higher or lower score, depending on their
internal underwriting requirements.

Instructions:
Simply make your selections from the dropdown boxes in the table below. Your
credit grade will be automatically upgraded whenever a selection is
made.

THINGS BEING EQUAL it's almost always better to own your home rather than to rent. After all, you build equity and get to write off your mortgage interest. And if you play your cards right, when you sell you'll be eligible for one of the best tax breaks around. But that doesn't mean that everyone should be a homeowner. If your move is short-term or if interest rates are high and property values outrageous, it may be worthwhile to deal with a landlord for a while. Our worksheet will help you determine which path is best.

WHERE DO YOU STAND financially? When it comes to estate planning, figuring this out is your first step. And chances are, once you're done with this calculator you're going to be surprised at how much you own.
The idea here is to total up all of your assets (house, car, retirement plan) and subtract your liabilities (credit card debt, mortgage). The result can be used as a baseline about planning for the future. Remember, however, this calculator does not account for any taxes owed on proceeds in an investment portfolio or retirement account.